Public Bill Committee

[Joan Walley in the Chair]

Clause 13

Defence for certain bribery offences: legitimate purposes

Amendment proposed (this day): 23, in clause 13, page 9, line 2, at beginning insert Subject to subsection (1A),.(David Howarth.)

Question again proposed, That the amendment be made.

Joan Walley: I remind the Committee that with this it will be convenient to discuss amendment 20, in clause 13, page 9, line 4, leave out any function of and insert functions relating to national security by.

This narrows the circumstances in which the security services can legitimately pay bribes to those in which national security is engaged.
Amendment 24, in clause 13, page 9, line 7, at end insert
(1A) But the defence shall not be available if the persons conduct was necessary only for the exercise of functions specified under
(a) section 1(3) of the Security Service Act 1989;
(b) section 1(2)(b) of the Intelligence Services Act 1994;
(c) section 3(2)(b) of the Intelligence Services Act 1994..

This rules out the defence in cases where only functions relating to safeguarding the national economic interest are engaged. The defence would still be available in cases involving national security or the prevention and detection of serious crime.

Claire Ward: It is good to have you back in the Chair, Ms Walley.
We return to the defence provided under clause 13, and specifically the application of that defence to the functions of the intelligence services. As hon. Members will be aware, Parliament has conferred statutory functions on the Security Service relating to national security, economic well-being and acting in support of law enforcement agencies in the prevention and detection of serious crime. In the case of Government Communications Headquarters and the Secret Intelligence Service, Parliament has determined that their respective functions should be exercisable for the purposes of national security, in the interest of the economic well-being of the nation, and for the prevention and detection of serious crime.
The amendments tabled by the hon. Member for Cambridge set out alternative approaches. Amendments 23 and 24 would limit the application of the defence to the intelligence services functions relating to national security and the prevention and detection of serious crime by excluding those relating to economic well-being. Amendment 20 would amend clause 13(1) to limit the defence only to the intelligence services functions relating to national security. Either approach, in our view, would be extremely detrimental, because it would undermine the ability of the intelligence services to combat all relevant threats to the United Kingdom.
The defence has been the subject of two reports by the Constitution Committee in the other place. The first report, which was published in December last year, expressed doubt about extending the defence to the services statutory function to safeguard the economic well-being of the UK. However, paragraph 10 of the report appeared to accept that
there may be a case for such a defence in the context of the Security and Secret Intelligence Services statutory functions in connection with national security and with the prevention and detection of serious crime.
In its second report, published in February, the Committee seemed to have accepted, or at least not disputed, the Governments explanation for including economic well-being with regard to the intelligence services and extending the defence to GCHQ.
We remain firmly of the view that the intelligence services must be able to carry out their full range of functions without falling foul of the criminal law when it proves necessary, for those purposes, to commit a relevant bribery offence. The range of functions conferred on the intelligence services is intended to cover matters that are of significant national importance, but not necessarily matters that relate simply to national security. In some operations, there might be considerable overlap between the functions, but that will not always be the case. Safeguarding the economic well-being of the UK might require the intelligence services to take action to monitor events and trends that might have a serious effect on the UK economy as a whole. That could include monitoring states that seek to undermine this countrys economy or to use economic levers as hostile policy tools. It might also involve identifying threats posed to the supply of energy and similar commoditiesthe hon. Member for North-East Hertfordshire made that point in an interventionthat are vital to the UK economy, or threats to undermine the stability of financial markets. Those issues should not be underestimated.
It has been suggested that the inclusion of economic well-being in the ambit of clause 13 would mean that the defence would fall foul of our international obligations. Let me assure the hon. Member for Cambridge that that is not the case. We are concerned to respect our international obligations to combat bribery, and we are confident that the defence as drafted is fully consistent with those obligations and, in particular, with the OECD convention on combating bribery of foreign public officials in international business transactions. It is for that reason that we have specifically excluded from the definition of a relevant bribery offence in clause 13(2) conduct that would amount to an offence under clause 6, which is bribing a foreign public official with the intention
to obtain or retain...business, or...an advantage in the conduct of business.
It is worth reminding the Committee that the Government amendments to clause 13, which we have already debated, will provide a further safeguard. Those amendments will require the heads of the intelligence services to ensure that they have arrangements in place so that conduct amounting to a relevant bribery offence will take place only when the defence would apply, and those arrangements must be considered satisfactory by the relevant Secretary of State.
There is an operational need for the defence to cover the full range of statutory functions, including economic well-being and the prevention and detection of serious crime. The defence would exist only when such conduct was assessed as necessary in accordance with the services respective statutory functions. We firmly believe that it would be wrong to criminalise the activities of the intelligence services in such circumstances, so I urge the hon. Member for Cambridge to withdraw the amendment.

David Howarth: As I understand it, the Governments argument is that compliance with the OECD convention on bribery requires them only to avoid a situation in which they authorise the corruption of foreign officials, and that any corruption involving the private sector in another stateor in Britainis okay. I am not sure that that is the case, but I am willing to take the Ministers word for it.
More generally, I am still bothered by the notion that functions beyond national security, which I accept is difficult to define for the purpose of this statute, justify the use of the weapon of giving bribes. If we look at the basic problem of the national economic interest, it seems difficult to argue that causing corruption is in that interest. One of the fundamental arguments in support of the Bill is that corruption is contrary to the economic interest of everyone.
I hear what the Minister says, and I suspect that it would be very difficult to adjust the clause to make it better. That drives me further towards the view that it would be better not have the clause at all, but with that in mind, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendments made: 26, in clause 13, page 9, line 4, leave out the Security Service, the Secret Intelligence Service or GCHQ and insert an intelligence service.
Amendment 27, in clause 13, page 9, line 7, at end insert
(1A) The head of each intelligence service must ensure that the service has in place arrangements designed to ensure that any conduct of a member of the service which would otherwise be a relevant bribery offence is necessary for a purpose falling within subsection (1)(a).
(1B) The Defence Council must ensure that the armed forces have in place arrangements designed to ensure that any conduct of
(a) a member of the armed forces who is engaged on active service, or
(b) a civilian subject to service discipline when working in support of any person falling within paragraph (a),
which would otherwise be a relevant bribery offence is necessary for a purpose falling within subsection (1)(b).
(1C) The arrangements which are in place by virtue of subsection (1A) or (1B) must be arrangements which the Secretary of State considers to be satisfactory..(Claire Ward.)

Claire Ward: I beg to move amendment 31, in clause 13, page 9, line 7, at end insert
(1D) For the purposes of this section, the circumstances in which a persons conduct is necessary for a purpose falling within subsection (1)(a) or (b) are to be treated as including any circumstances in which the persons conduct
(a) would otherwise be an offence under section 2, and
(b) involves conduct by another person which, but for subsection (1)(a) or (b), would be an offence under section 1..

Joan Walley: With this it will be convenient to discuss amendment 21, in clause 13, page 9, line 22, leave out paragraph (b).

This removes offences relating to being bribed from the scope of the offence, so that it could only be used as a defence to offering bribes.

Claire Ward: The amendments address the question of whether the offence under clause 2 of requesting, agreeing to receive or accepting a bribe should be a relevant bribery offence for the purpose of clause 13 and therefore come within the scope of the defence. We believe that it should, but I accept that there is a need to clarify the matter. To that end, I have tabled amendment 31. In explaining why we need to include the offence, I shall also deal with amendment 21, which I assume that the hon. Member for Cambridge tabled as a probing amendment.
We have not included the clause 2 offence to cater for bribes paid to members of the intelligence services or armed forces. We do not envisage that there would ever be a situation in which a member of the intelligence services or armed forces accepting a bribe to induce or reward improper performance of their official functions would be covered by the defence. We intend that the clause 13 defence will provide protection for not only members of the intelligence services and armed forces who might need to pay a bribe in furtherance of a function of the agency concerned, but the recipient of such a bribe.
In the other place, Lord Thomas of Gresford raised the case of two people finding themselves in the dock charged with an offence under the Bill: an officer of an intelligence service who had paid a bribe, and an agent who had received the bribe. Lord Thomas suggested that it would be grossly unfair that the first person could avail themselves of the defence but the second person could not. Although such a scenario strikes me as highly improbablebecause it would be highly improbable that the case would come to trialI agree with the premise that such a situation would be grossly unfair. If it was necessary for the bribe to be paid in pursuit of a function of the intelligence services, that should be sufficient to trigger the defence for the recipient of the bribe. I recognise that there is uncertainty about whether the clause as drafted fully delivers that policy intent, so the Government amendment will put the matter beyond doubt. I am grateful to the hon. Member for Cambridge for highlighting the issue.

David Howarth: I thank the Government for tabling amendment 31, although I would be grateful if the Under-Secretary would explain in more detail how it works technically, as it is a difficult amendment to follow. She is right that my amendment 21 is probing. It occurred to me that the circumstances under which one might want to authorise intelligence officers to receive bribes were rather obscure. The hon. Member for Poole has suggested a case involving double agents, but I worry about that, because the question would arise under clause 3 of whether a double agent was performing his or her function in good faith or impartiallythe last people in the world expected to operate in good faith are double agents. I am grateful to the Government for taking the issue seriously, but I ask the Under-Secretary to explain the amendment in more detail.

Jonathan Djanogly: I share the hon. Gentlemans concern about the wording of the Government amendment. I have read it several times and find it very dense. I would welcome extra explanation from the Under-Secretary on how it works, and it would be helpful if she took us through the route it takes.
Looking at the hon. Gentlemans amendment, the possibility came to mind of a double agent who was sent over to the enemy

David Howarth: Who receives the bribe.

Jonathan Djanogly: Exactly. Who takes a bribe to ingratiate himself or herself with the enemy as part of a cover operation. In line with my comments about his amendments in the previous group, although amendment 21 is worthy of debate, it would narrow the clause to an extent that would be unsuitable for the purposes of the exemption.

Claire Ward: As I have said, the Government amendment makes it clear that when a person receives a payment from a member of one of the intelligence servicesamounting to an offence under clause 1and the payment is in pursuit of any of their statutory functions, provided that the defence is available to the officer making the payment, it will also be available to the individual receiving the payment. That seems only just and equitable, given that many individuals already provide invaluable assistance to the intelligence services at considerable personal risk to themselves and their families. In response to legitimate requests by members of the services, the amendment will provide additional and important reassurance for those individuals who receive a financial or other advantage for their efforts that they will not be criminalised.

David Howarth: I can see what the Under-Secretary is getting at but the way it is done seems a bit obscure. Proposed new subsection (1D) says that those circumstances are to be treated as circumstances in which the activity is necessary. However, that seems to be additional to the general coverage of clause 2, rather than defining it.

Claire Ward: I am seeking to make the policy behind the amendment as clear as possible. As the hon. Gentleman will know, it is always helpful not just for Members of the House but, in due course, for prosecuting authorities and courts if we are absolutely clear about the intention behind any such amendments.

Oliver Heald: I may be wrong, but I had understood the reason for the inclusion of clause 13(1) was that paragraphs (a) and (b) both discuss the fact that the conduct was necessary for the proper exercise of the function. The concern might have been that it could not be the proper exercise of the function if it was an act which is made illegal under clauses 1 or 2. Clause 13(1) is therefore needed to make it clear that it can be proper, despite the fact that it is illegal.

Claire Ward: Essentially, someone has the defence if their conduct is necessary. If it is necessary for them to pay a bribe the clause provides that it is treated as necessary for the receiver to receive the bribe. That is the intention behind the amendment.
As I am sure Opposition Members will know, the recruitment of agents in highly sensitive positions is not assisted where there is no assurance that they will not face investigation and possible prosecution by doing what they are asked to do. Equally, criminalising their behaviour would is likely to act as a significant disincentive for the majority of members of the public who would instinctively want to respond positively to a request from one of the services for assistance, thus significantly undermining the good will and support of public on which the services rely.
There is one further, technical reason why the clause 2 offence needs to be included in the definition of a relevant bribery offence. A member of the intelligence services offering, promising or giving a bribe would, in addition to committing the clause 1 offence, technically be aiding and abetting the commission of a clause 2 offence and committing the inchoate offence of assisting or encouraging the commissioning of the clause 2 offence. It is therefore necessary that we include both offences within the definition of a relevant bribery offence in clause 13. I trust that that sheds a little more light upon the hon. Gentlemens ongoing concerns.
The examples I have given relate to the intelligence services, but the selfsame arguments would apply to any bribe paid by members of the armed forces. I trust that the Committee will now accept the need to include the clause 2 offence and will support the clarification provided in amendment 13.

Amendment 31 agreed to.

David Howarth: I beg to move amendment 22, in clause 13, page 9, line 7, at end insert
, provided that the defence shall not apply in any case where the intention or the effect of the bribe is to induce the purchase of weapons or other defence equipment.
This is a probing amendment, but it was prompted by remarks made by the hon. Member for City of York (Hugh Bayley) on Second Reading. He was concerned that exemption given to the armed forces might somehow be used as cover for arms sales. He rightly raised that problem, so do the Government envisage any circumstances in which it would be proper for the armed services to bribe someone during active operations? I remind hon. Members that it cannot be bribing a foreign official; it can only be bribing a foreign private sector actor in relation to arms sales. I must admit, having listened to the hon. Member for City of York, I could not imagine what those circumstances might be. The underlying point comes back to what the Under-Secretary said previously, that the clause 6 offence of bribing a foreign official is not covered by this defence. The amendment is therefore simply a way of inviting the Under-Secretary to comment on the point raised by the hon. Member for City of York and now raised by me.

Jonathan Djanogly: Again, I have been trying to think of circumstances where the amendment would apply and, generally speaking, I hold the same view that it would not be appropriate to limit the scope of the clause. I suppose it could be a very basic situation of someone on the battlefield running out of bullets and bribing a local tribesman to buy some, or it could be something very convoluted like the Iran-Contra arms deal. Either of those could be slipped into the clause.

Robert Syms: I rather suspect it would be in a police action, in which one is dealing with militias or various groups such as in Bosnia, where one might not wish to shoot them; one would rather give them a bit of money so that they would do something of benefit to the UK Government.

Jonathan Djanogly: There we have a third instance, and perhaps the most useful of the three. In any event, we will not support the amendment. It is too specific for the clause and no doubt will be brought into the hon. Gentlemans comments when we reach the stand part debate.

Claire Ward: Through this amendment, the hon. Member for Cambridge is seeking an assurance that the defence in clause 13, particularly as it applies to the armed forces, cannot be used to sanction bribery in the context of defence contracts for weapons or other military equipment. I can indeed give him the assurance that he seeks.
The first point to make is that a relevant bribery offence for the purpose of clause 13 does not include an offence under clause 6. Consequently, any bribery of a foreign public official with the intention of obtaining or retaining a business or business advantage is not covered by the defence. Accordingly, no one could mount the clause 13 defence in any case involving the bribery of a foreign public official to induce that official to place a contract with a particular company for the supply of arms.
Secondly, it is important that the Committee understands the way the defence will work. A person may only plead the defence where their conductthe giving or taking of a bribewas necessary for the proper exercise of any function of the armed forces when engaged on active service. The necessity test is critical. It is not a question of whether the briber thought that the armed forces would ultimately benefit in some way. We can think of no circumstances where the relevant conductnamely, the payment of a bribe to induce the purchase of defence equipmentcould be necessary for the proper exercise of any function of our armed forces when engaged on active service.
That would equally be the case if the person engaged in the conduct concerned was an employee or agent of a defence equipment manufacturer, as it would be with any other person. As I have said, we do not see on what possible basis such a person could successfully argue that a bribe to induce someone to purchase their companys equipment, as opposed to the equipment of a rival company, meets the necessity test in clause 13(1).
That would be true if the bribe was being paid to, say, a Ministry of Defence official to secure a contract in this country, but the proposition that the defence might apply is even more far-fetched where the bribe is being paid to secure a contract in another country. The defence applies to the proper exercise of any function of the armed forces of the United Kingdom and not of any other country. The focus of the clause 13 defence as it applies to the armed forces is to afford protection to members of the armed forces, and civilians working in their support, who may have to engage in conduct that would amount to an offence under clause 1 or clause 2. It is not a licence for the defence industry to commit bribery. There will be no creep in the scope of the defence, as was feared by my hon. Friend the Member for City of York (Hugh Bayley) when he spoke on Second Reading, and also by the hon. Member for Cambridge. In short, the amendment is simply not necessary, and I therefore invite the hon. Gentleman to withdraw it.

David Howarth: I thank the Under-Secretary for her assurance, and I am sure that the hon. Member for City of York would do so, too. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendments made: 28, in clause 13, page 9, line 16, at beginning insert civilian subject to service discipline and.
Amendment 29, in clause 13, page 9, line 16, leave out has and insert have.
Amendment 30, in clause 13, page 9, line 18, at end insert
head means
(a) in relation to the Security Service, the Director General of the Security Service,
(b) in relation to the Secret Intelligence Service, the Chief of the Secret Intelligence Service, and
(c) in relation to GCHQ, the Director of GCHQ,
intelligence service means the Security Service, the Secret Intelligence Service or GCHQ,.(Claire Ward.)

Question proposed, That the clause, as amended, stand part of the Bill.

David Howarth: The question now is whether clause 13 is necessary and desirable. As I said when we debated clause 10, there are a number of ways of dealing with situations in which important UK Government officials might have to engage in illegal activity, in the kind of circumstances that the Under-Secretary mentioned earlier. I do not want to go through those examples one by one. One way of dealing with the problem is provided by the prime authorisation system, which the Government have rejected. Another way is to define the offence more tightly, so that such activities are not illegal in the first place. The difficulty with that, however, is the knock-on effect on other cases, and there is also the problem of international obligation.
The fourth solution, which I know from previous debates is not popular with Conservative members of the Committee, is to use prosecutorial discretion and to say that we do not want to declare that kind of activity lawful because by doing so we undermine the principle that we are trying to upholdthat bribery is wrong. We want to maintain clearly that condoning bribery in any way in our own law would have deleterious effects more generally. For example, it would be more difficult for us to complain about other people who had similar get-out clauses, and the general corrosive effect of a culture of bribery would, at that stage, be in play. It is a similar argument to that which the Government and I both make about the exemption from the so-called facilitation payments which, as the Under-Secretary of State said, are simply bribes. Should we have that sort of exemption in the Bill? The argument against prosecutorial discretion is clear: we should not allow the criminal law to become a tool in the hands of the prosecutors to pick and choose who is to be subject to criminal law. However, discretion cannot be avoided. Prosecutors need that sort of discretion to make the system workable, and I come down in favour of it as the solution. It seems that the Government have also accepted that argument, given the way in which the clause works.

Jeremy Wright: As for prosecutorial discretion, is not the difference under the clause the fact that we would be asking prosecutors in such circumstances to take into account factors that they are not used to taking into account? Issues of national security and the like are not things that, in the ordinary course of events, we invite prosecutors to take into account when making what, I accept, are regular judgments of discretion.

David Howarth: That is an important point, but I do not accept it because of precisely what happened in the al-Yamamah case when the director of the Serious Fraud Office took the decision not to proceed with that investigation on the grounds of national security as put to him by Ministers. It is important to remember that part of the Governments defence of their position in that case was, in the end, that the Attorney-General did not instruct the director of the SFO to call off the investigation or use the power of superintendence. The Government always sayit is technically truethat the director himself took into account national security considerations and called off the investigation. Although it is unusual, the Government cannot say that things cannot be done, because they also say that such things have been done.

Oliver Heald: Is not the important difference the fact that clause 13 deals with a situation in which the state, not a commercial interest, is making payments? For example, after a conflict, it might be necessary as an interim measure to make some payments. Our forces might make them in good faith to re-establish government and good order in a country. Those circumstances are different from what the hon. Gentleman has been talking about.

David Howarth: Matters are different, but they are not different enough to justify a different approach. Why should there be a specific defence in statute as opposed to using the same techniqueprosecutorial discretionbecause what is said could be taken into account by a prosecutor?

Oliver Heald: That is not good enough. If the state decides that, in the process of pacifying an area which has been a conflict zone, it is necessary to make some payments and our armed forces do so, they should not be subject to the whim of the prosecutorthey should be not guilty.

David Howarth: The armed forces should have the defence available, because the idea that they should not have been guilty in the first place is the fourth solution that most people have now rejected. Should we maintain the possibility of a prosecution if the armed forces or the intelligence services had abused their position in some way? We cannot tell in advance whether that will be the case. The point about discretion is that it leaves the law to be used in an appropriate case. To have a defence creates a problem, as it risks undermining the importance of the crime itself.
What is the situation under clause 13 in respect of the clause 6 offence of bribing a foreign official? In such cases, prosecutorial discretion is in place because nothing under clause 13 covers it. What is the situation with regard to law enforcement officials, as opposed to the armed forces and intelligence services? The relevant part of what was clause 12, now clause 13, was by general consent removed from the Bill. The position for law enforcement agencies is, again, one of prosecutorial discretion. If prosecutorial discretion works in those two instances, I cannot see why the principle should not be applied to all relevant cases, so I oppose clause 13 standing part of the Bill.

Jonathan Djanogly: We feel that the outcome achieved in the other place on the clause and on clause 10 remains broadly correct. However, inherent in the debate is the question of where we draw the balance between ministerial accountability for what are operational decisions by the armed forces and intelligence services, and the need to maintain a Bill that is fit for purpose and that will not jeopardise the operational effectiveness of troops on the ground. A proud tradition of the British forces has been that command decisions are, within the remit of orders, taken by the man on the ground. We are therefore reluctant to accept the position offered by the hon. Member for Cambridge.
To exclude altogether a defence for the armed forces and intelligence services would leave the Bill in disarray and, ironically, as the hon. Gentleman explained, it would force us back to the Governments great cure-all for the potential pitfalls of the Bill, namely prosecutorial discretion. If we do away with, or significantly weaken, the defence provided for in the clause, we would do just that. Relying solely on prosecutorial discretion so as not to criminalise those individuals defending the nations security would, we accept, place an unnecessary burden on those exceptional individuals, without giving them the certainty that they need in order to act. In addition, as my hon. Friend the Member for North-East Hertfordshire rightly said, a non-commercial issue is different, when it is in defence of our country.
If the hon. Member for Cambridge can suggest a series of carve-outs from the basic defence, why can he not accept the concept of a carve-out from prosecutorial discretion? We accept that there are situations in which it is in the national interest for state agents to act outside the normal parameters of the Bill, but we are firm in our opinion that the Committee must ensure that acts of bribery are carried out on behalf of the state only when necessary, and that officers of the state are given as much assistance as possible in advance so that they know when it is permissible to carry out such acts. In doing away with the other places amendments to clause 10, we feel that the Government may have undermined that principle by putting the emphasis back on clause 13, which Lord Pannick described as
deficient in relying on a criminal prosecution after the event, with the onus of proof on the defendant as sufficient protection of the public interest.[Official Report, House of Lords, 8 February 2010; Vol. 717, c. 482.]
As I said on Tuesday, I have returned to my hon. and noble Friends to discuss the Governments position, and we still find the provisions deficient.
The issue of prior authorisation is a vexed one, and it has been raised in Committee and in the debates in the other place. Concerns focus on how such a requirement gives rise to the drawbacks attributable to over-reliance on prosecutorial discretion; there would be no certainty at the point at which the offence was committed that the defence would operate. Lord Bach noted, in a very long speech in response to the stand part debate in Committee in the other place, that the insertion of an authorised mechanism
would be an unwelcome and ill-advised development in our criminal process for a Minister of the Crown to decide whether a statutory defence should be available to an individual charged with an offence in a particular case.[Official Report, House of Lords, 13 January 2010; Vol. 716, c. 104.]
The Government have based their amendments to clause 10 on that premise, but we fear that it is flawed. The authorisation procedure proposed in clause 10 would have a protective effect, as it would exempt the individual from the offence before it was committed. As Lord Pannick said of the Governments reliance on a clause 13 defence alone that he
would be surprised if officers would be willing to conduct acts of bribery and to take the risk of later prosecution.
The Government have misinterpreted the amendment, which
does not require prior authorisation; it simply recognises that where the Secretary of State gives prior authorisation, a prosecution should not take place thereafter.[Official Report, House of Lords, 8 February 2010; Vol. 717, c. 482.]
In essence, the act of bribery is not criminalised and no defence is required. That means that the individual does not have to raise a defence. It seems that the Government may have put the cart before the horse in relation to their amendments to clause 10, because they have criminalised all such actions and require individuals who are subject to clause 13 to raise a defence in a court of law.
I shall draw out that point because it impacts on clause 13. In so doing, I reiterate concerns raised by Lord Thomas in another place. In the Bill as drafted, the burden of proving the defence is on the person charged. That is no mere evidential burden; he actually has to prove his innocence. In doing so, he must prove that he has properly exercised his function as a member of the relevant body. How does he do so, and how do those who are acting on his behalf have access to the documentation necessary for him to give that proof? In addition, how can he go into a court and raise those issues before a jury, except in the most exceptional circumstance of secret hearings? It could be extremely difficult to prove these matters.
If there are secret matters to be conveyed, that should not be done to the court, jury or defence team, but to the person who takes the decision to prosecute the Director of Public Prosecutions, the director of the SFO, Her Majestys Revenue and Customs, or the Attorney-General. Those are the people to whom representations could be made under the provisions of clause 10, but that is not the case under clause 13. We seek to carve out protection for such individuals in relation to clause 13. The defence should cut in when charging somebody who has in effect just been doing his job and on whom all the burden of defending himself would fall.
The functions of the Security Service, the Secret Intelligence Service and GCHQ are defined in statute. It is right that the Bill should mirror those and not take a selective approach, which the Liberal Democrat amendments to the clause would have done. Such an approach could undermine the ability of the services to discharge their legitimate purposes. To over-concentrate the defence on particular functions would be to allow for uncertainty. All those services have three core functionsnational security, the economic well-being of the nation, and the prevention or detection of serious crimeenshrined in statutory provisions. As one would expect, there is considerable overlap between those three functions, which is why a broad defence is needed in the form of clause 13.
It would not require too great a leap of the imagination for members of the Committee to surmise that the UK intelligence and security services may seek to indentify, recruit and run sources in a manner that sometimes involves conduct that may amount to the definition of bribery in the Bill. Likewise, to maintain a strategic interception capability and to continue to provide intelligence on certain targets that are critical to our national security, GCHQ may need to provide equipment or assistance to individuals who are in a position to support its interception mission in challenging environments.
The functions of the armed forces are perhaps the most visible ones referred to in clause 13, not least because of the ongoing operations in Afghanistan. The purpose of the extension of the defence to them is self-evident. We should not criminalise conduct that would amount to bribery by the military, where it is necessary during active service. Although the Conservatives agree with the Government on that stance, I shall reiterate the point made by Lord Pannick in the other place, as an answer was not forthcoming then. Will the Under-Secretary tell us whether there are any examples in recent years where prosecution authorities have been asked to consider prosecution of a member of the armed forces for alleged bribery during the course of performing a function of the armed forces? The offences created by the Bill will capture instances where members of the three services recruit and reward agents and contacts in the UK and abroad. In the absence of the defence under clause 13, service staff and those acting on their behalf will be exposed to potential liability when carrying out functions bestowed on them by Parliament in pursuit of the requirements set by Government.
We feel that the other place has struck the right balance and that the Governments removal of the prior-authorisation mechanism in clause 10 is wrong. There is a need to strike a balance between defence from the criminal law on the one side, and catering for the needs of those who undertake important functions on behalf of the public on the other. There will be times when the protection of national security or the safety of our armed forces justifies certain organs of state committing acts of bribery. We accept that. However, we must ensure that such actions are taken on the basis of sure legal footing.

Claire Ward: After listening to the hon. Gentleman, never have I thought the phrase Johnny-come-lately was more apt and appropriate. He is telling the Committee his views on the amendment to clause 10, which we debated on Tuesday evening, because he has had the opportunitysome seven days laterto discuss the matter with his colleagues in the Lords. It seems that, despite the view that he came to very late, he has still got it wrong, because it is not an exemption that is created. Clause 13 simply provides a defence, and extra measures are provided by the amendment in clause 10 to ensure that the heads of the intelligence services and the head of the armed forces defence council have in place procedures that the Secretary of State considers satisfactory.
The real problem, as I explained on Tuesday nightthe hon. Gentleman had not quite got to grips with the issue thenis that the clause that came to this House as a result of amendment in the other place, created a hybrid, which allows for an authorisation scheme in addition to the defence, and is not satisfactory for those who work in intelligence services or defence. In practice, those who are conducting activities that would be bribery without the defence that is available to them, would have to seek advance authorisation. That is the reality of the clause that came from the Lords.
The prosecution would put the case to court or consider it before it went to court, and would want to know why, if an authorisation could be available, it was not given. That could muddy the waters rather than give a clear and precise explanation of a defence that would be available to those who had, in effect, committed an offence under the other clauses.

Jonathan Djanogly: The Under-Secretary should go back to a stage before that. In most circumstances it would not be relevant because one would have thought that before that later stage, the prosecution would have taken a view on whether it wanted to prosecute. It may have made some inquiries at the earlier stage, so I hope that it would not even have got to that point.

Claire Ward: Of course, prosecutors would have considered carefully before deciding whether to proceed with the case, but the fact that an authorisation could have been made available, but was not, would not make the case any clearer. In fact, it would make it much more difficult. Why would they proceed with the activity that was, in effect, bribery when they could have had an authorisation, but did not, and are simply trying to rely on that defence? That is not a clear and precise method to expect our intelligence and defence services to rely on when there is a simple and much clearer wayrelying on the defence in clause 13. I am sorry that the hon. Gentleman is seeking to reopen the debate from Tuesday night. Frankly, he has still not managed to get to grips with the issue.
The defence in clause 13 addresses matters of national importance relating to the operations of intelligence services and armed forces, and has proved to be one of the more contentious parts of the Bill. I understand that, but the clause under consideration now is not the one that was in the Bill when it was introduced in the other place in November last year. The House of Lords Select Committee on the Constitution produced two reports on the clause and, as the hon. Member for Cambridge made clear, it was extensively debated in the other place.
We have taken note of the comments made, and considered the clause carefully. We have improved it and the Bill significantly as a result of those discussions. We listened to the views expressed about the much broader inclusion of law-enforcement authorities, and we have significantly narrowed the application of the defence. We disagreed with the approach taken in the amendments made in the other place to augment the defence with the ministerial authorisation scheme, but we have since responded positively to Lord Pannicks argument for some form of ministerial oversight.
Under the amended clause, the Secretary of State will be required to approve the arrangements put in place by the heads of the intelligence services and the defence council designed to ensure that bribery takes place only in the circumstances covered by the defence. That is a much simpler and clearer way to express it than the form in which it came from the other place. We remain convinced that the clause is required to protect the legitimate functions of the intelligence services and the armed forces.
Clause 13 will ensure that a defence exists where conduct amounting to an offence under the Bill is necessary for the proper exercise of a function of the intelligence services or armed forces when engaged on active service. That may be the case where it is necessary to secure critical intelligence or assistance or to ensure the safety of military personnel. It is important that the individuals who carry out these vital functions know that this legal protection has been conferred by Parliament. We believe that the defence as amended represents the best balance between providing legal certainty and ministerial accountability and the need to maintain operational flexibility and effectiveness.
I have already explained why to require prior ministerial authorisation for such conduct would not be practical in these circumstances. Likewise, relying on prosecutorial discretion not to bring charges against those carrying out these important functions would not provide sufficient legal certainty. To ask someone to offer a bribe in the knowledge and belief that their actions were unlawful would place that person in an invidious position, even if no prosecution followed.
The defence makes it clear to anyone concerned that, should a person be required to use a financial or other advantage to secure intelligence or assistance, they would have a defence that could be put before the court. This does not mean that the defence will be of use only to those who are charged and prosecuted. It will also assist prosecutors in deciding whether a prosecution should be brought in the first place. I cannot emphasise more strongly how important that is in a practical sense for prosecutors and those engaged on behalf of the intelligence services.
One can expect that, where prosecutors are satisfied that the defence applies, no prosecution will result. If, on the other hand, they are not satisfied as to the circumstances, the matter will go to court and it would be for the defendant to persuade the jury, on the balance of probabilities, that the defence applies. There is precedent for such a defence in section 1B of the Protection of Children Act 1978, which relates to the offence of taking, distributing, possessing or publishing indecent images of children, and the courts are capable of dealing with these sensitive matters in accordance with existing procedures and practice.
It is not the case that including economic well-being in the defence would put us in breach of our international obligations and, in particular, the OECD convention. The clause specifically excludes from the definition of a relevant bribery offence in subsection (2) conduct which would amount to an offence under clause 6, that is conduct that would amount to the bribing of a foreign public official with the intention to obtain or retain business or an advantage in the conduct of business. We are therefore confident that it is fully consistent with the OECD convention, as I have already told the hon. Member for Cambridge.
We remain firmly committed to protecting from criminal liability those carrying out the legitimate functions of the intelligence services and armed forces. These individuals are faced with difficult operational circumstances which can necessitate the use of financial or other inducements to achieve their objectives.

Robert Syms: Clearly, if troops are on active service somewhere and a bribe or a facilitation payment or whatever was needed, the money would have to come from somewhere. Unless our troops are extremely well paid, someone would have to authorise the money, the goods, the food or whatever was used. It is highly unlikely that a captain, a major or a sergeant would have sufficient funds to go round bribing people on behalf of Her Majestys Government. Authorisation would have to be given at some point.

Claire Ward: I think the hon. Gentleman misunderstands the concept of authorisation in relation to the security services. He is right in a sense, that there would need to be procedures in place for such an activity under the amendments that we made to clause 10 in relation to the use of the defence. The Secretary of State will need to be of the view that those procedures are satisfactory. But that is quite different from an authorisation scheme and from the authorisations that were included in the original clause as it came from the other place. Of course, people who serve this countrywhether in the armed forces, on active duty or in our intelligence servicesprotect us from real threats to our society and to our well-being. They should not be exposed to the risk of prosecution when it is evident that their conduct is legitimate. To do so would have significant operational implication for both the intelligence services and our brave armed forces in the sort of circumstances described by the hon. Member for Poole; for example, those on active duty in Afghanistan.
I put it to the Committee that we have made significant improvements to the clause as a result of extensive debates both here and the other place. The defence now provides a secure legal footing for the activities of the services concerned, while ensuring an appropriate level of oversight and accountability. On that basis, I invite the Committee to agree that clause 13 should stand part of the Bill.

Question put, That the clause, as amended, stand part of the Bill.

The Committee divided: Ayes 13, Noes 1.

Question accordingly agreed to.

Clause 13, as amended, ordered to stand part of the Bill.

Clause 14

Offences under sections 1, 2 and 6 by bodies corporate etc.

Question proposed, That the clause stand part of the Bill.

Jonathan Djanogly: The clause ties in senior officers of companiesor perhaps I should say bodies corporateto clause 1, 2 or 6 offences. It works by saying that if a senior officer commits an offence, the underlying offence is
proved to have been committed with the consent or connivance 
of that senior officer. We have been asked whether the Under-Secretary could explain, or rather clarify, the meaning of connivance in that context. It is, of course, an extremely important matter that

Claire Ward: Who has asked the hon. Gentleman to seek clarity on the matter?

Jonathan Djanogly: Let me change that to say that I am asking. It is an extremely important matter that an employee or officer could also be prosecuted for a clause 1, 2 or 6 offence with very serious consequences. To clarify those circumstances is also, therefore, very important.

Robert Syms: Just to follow up on that point very briefly, clearly if a senior officer has given consent, that is something that would happen in advance of an offence occurring. If, on the other hand, a senior officer finds out that an employee has done something and covered it up, then, to an extent, that might be connivance. Presumably, both would be covered by that particular aspect. I would be grateful for further clarification from the Under-Secretary.

Claire Ward: Clause 14 recognises that it is individuals who undertake bribery, even where a body corporate is held responsible. The clause provides that where a body corporate or a Scottish partnership has been found guilty of bribery under the general or foreign public official offences, a director, partner or similar senior officer of the body or partnership is guilty of the same offence if he or she has consented to or connived at the commission of the offence. It does not apply to the failure by commercial organisations to prevent bribery offence in clause 7.
The consent or connivance provision follows the model of section 12 of the Fraud Act 2006 and, previously, section 18 of the Theft Act 1968, among othersit is a relatively common provision. I am sure the hon. Member for Huntingdon, as a solicitor, will be well versed in such things. The Law Commission report, paragraph 6.132, noted that
there is a compelling case to extend the consent and connivance regime applicable in fraud cases to bribery offenses.
The clause does not create a second offence of consent or connivance; rather, the body corporate and senior officer are guilty of the main bribery offence. If that is not a sufficient explanation for the hon. Gentleman on the details of connivance as set out in other legislation, I am more than happy to write to him.

Jonathan Djanogly: That is quite sufficient; I thank the Under-Secretary for the information.

Question put and agreed to.

Clause 14 accordingly ordered to stand part of the Bill.

Clause 15

Offences under section 7 by partnerships

Question proposed, That the clause stand part of the Bill.

Jonathan Djanogly: The clause deals with offences under clause 7 by partnerships and states that the proceedings must be brought in the name of the partnership. However, subsection (3) states that any fine imposed on the partnership is to be paid out of the partnership assets. I have two questions. First, why is the Bill going away from the standard position that partners are personally responsible for the debts of the partnership? Secondly, if a clause 7 offence were prosecuted, could the partners be pulled into the prosecution through clause 14? If they cannot be pulled in by that means, why is it fair that individuals doing business as a company can be personally prosecuted under clause 14, but individuals doing business as a partnership cannot?

Claire Ward: Clause 15 includes technical provisions to deal with proceedings for an offence under clause 7 against a partnership. Under subsection (1), such proceedings must be brought in the name of the partnership and not the partners. Subsection (2) provides that certain provisions have effect for a partnership, as they do for a body corporate: namely, the rules of court relating to the service of documents and the procedure on charge of an offence against a corporation. Subsection (3) provides that any fine imposed on the partnership on conviction must be paid out of the partnership assets; it is another provision found regularly in legislation. A recent example, of which the hon. Gentleman may be aware, is the Corporate Manslaughter and Corporate Homicide Act 2007, in which there are similar provisions. If that is not sufficient detail for the hon. Gentleman, I am more than happy to write to him with more information about other legislation.

Jonathan Djanogly: Could the Minister address my second question? I shall repeat it for her benefit. If a clause 7 offence were prosecuted, could the partners be pulled into the prosecution through clause 14? If they cannot be pulled in by that means, why is it fair that individuals doing business acting within a company can be personally prosecuted under clause 14, but individuals doing business as a partnership cannot?

Claire Ward: My understanding is that they cannot.

Jonathan Djanogly: Who cannot? Why?

Claire Ward: My understanding is that partners cannot be prosecuted on that basis.

Jonathan Djanogly: The fact that they cannot be prosecuted is in the Bill. My question is, why is there a seeming differentiation between a partnership and a company?

Claire Ward: The hon. Gentleman is seeking, I think, clarification on whether partners can be brought in under clause 14.

Jonathan Djanogly: Correct.

Claire Ward: My understanding is that they cannot. However, should any further clarification be required, I am happy to write to the hon. Gentleman.

Jonathan Djanogly: May I just clarify the point? I could start a business by setting up either a company or a partnership. The Under-Secretarys answer suggests that it would make sense to set up a business under a partnership, because I would not then be liable as an individual under the terms of the legislation. Were I to set up a business by using a company, however, I could be personally liable under the provisions of clause 14. That is the point I am trying to make. It seems to be an anomaly and it needs clarification.

Claire Ward: I am not in a position to provide any further clarification at this stage. Should any further information be required, I am happy to write to the hon. Gentleman.

Oliver Heald: On the partnership assets in clause 15(3), a call can normally be made on the partners if the partnership owes a debt. Subsection (3), however, seems to suggest instead that the assets of the partnership as constituted at the time of conviction would be subject to the fine. If so, is there not a danger of avoidance measures being taken?

Jonathan Djanogly: My hon. Friend makes an important point. I think the Under-Secretary said in her opening remarks that the standard position is that partners cannot be held personally liable, and she cited legislation in which that is the case. I agree with my hon. Friend, however, that the starting position in a partnership is that partners are personally liable. The proposal is unusual, so why are we going down that route?

Oliver Heald: It would be worth the Under-Secretary addressing the question of whether the provision runs any risks of avoidance. If it does not, that would be all to the good.

Claire Ward: We are discussing the difference between debts and criminal liability in relation to a partnership. Regarding subsection (3), any fine should be paid out of the partnership assets, and that is not unusual in other legislation. I am happy to reflect on the issues raised by the hon. Members for North-East Hertfordshire and for Huntingdon, and to write to them in due course.

Question put and agreed to.

Clause 15 accordingly ordered to stand part of the Bill.

Clauses 16 and 17 ordered to stand part of the Bill.

Schedules 1 and 2 agreed to.

Clause 18 ordered to stand part of the Bill.

Clause 19

Commencement and transitional provision etc.

Question proposed, That the clause stand part of the Bill.

Jonathan Djanogly: Will the Under-Secretary explain the discussions that she or her Department has had with Scottish Ministers on how the Bill will be applied in Scotland?

Claire Ward: The reform of the law on bribery and the commencement is a devolved matter in Scotland. Accordingly, the extension of the Bill to that jurisdiction is subject to the Scottish Parliament passing the necessary legislative consent motion. I understand that the Scottish Justice Minister tabled such a motion on 11 February, and it has subsequently been passed.
Clause 19 covers commencement and the Bills substantive provisions. The new criminal offences will be brought into force by a commencement order by the Secretary of State. As I have indicated, we will not commence the new offence of the failure on the part of a commercial organisation to prevent bribery until we have published the relevant guidance for commercial organisations, as required by clause 9. Such guidance will be available well in advance of the legislation coming into forcean assurance that I gave to hon. Members and the Committee earlier this week. That being the case, we do not envisage bringing that offence into force before 1 October 2010 at the earliest.

Question put and agreed to.

Clause 19 accordingly ordered to stand part of the Bill.

Clause 20 ordered to stand part of the Bill.

New Clause 1

Annual strategy report
The Secretary of State shall make provision for the publication of an annual report to be issued by the Government which shall set out as a minimum
(a) the Governments anti-bribery objectives and strategies for the coming year as well as the milestones to be used to assess the success of such strategies;
(b) an assessment of the success of the preceding years strategies and objectives by way of measurement against pre-determined milestones as expressed in the preceding years report;
(c) details of the advisory services that may be used by commercial organisations on a without prejudice basis on the details of how they may be contacted, and
(d) the fee to be paid for the use of such advisory services..(Mr. Djanogly.)

Brought up, and read the First time.

Jonathan Djanogly: I beg to move, That the clause be read a Second time.
The new clause deals with an annual strategy report. It asks the Secretary of State to make provision for the publication of an annual report to be issued by the Government. The report would have a minimum of four strands, including the Governments anti-bribery objectives and strategies for the coming year, as well as the milestones to be used to assess the success of such strategies, and an assessment of the success of the preceding years strategies and objectives by way of measurement against pre-determined milestones as expressed in the preceding years report. There are two further provisions relating to advisory services that are covered by a separate new clause, which I will not go into at this stage.
The new clause draws on two strands for inspiration. First, there is the recommendation from the Joint Committee on securing compliance with the Bill. Secondly, there is the Governments strategy paper, published in January 2010, called UK Foreign Bribery Strategy. We feel that as things stand, there is a need for a more effective system to monitor the Bills implementation. Parliamentary oversight and putting it into the context of an overall anti-corruption strategy will be important. The new clause would be a step in the right direction to ensure that such oversight is maintained.
Of note is Transparency Internationals general agreement with the principle of parliamentary oversight. However, it raises an interesting point in its briefing paper published in the run-up to the Committee sittings. It asks:
What other criminal offence requires statutory monitoring?
In response, we would point to the prosecution rate for briberyI will come to thatand the inherent difficulty with monitoring the crime.
Bribery, more so than any other crime, often takes place in the shadows. Collecting the evidence to prosecute is intrinsically difficult. A change in corporate culture has been the watchword throughout the pre-legislative process, and it has come to the fore on a number of occasions during the debate in Parliament.
The inherent intangibility of such goals is often not seen with other crimes or criminal statutes. For example, it is far easier to quantify a fall in violent crime or an increase in burglaries. We are attempting to legislate through the Bill for a change in attitude, and that calls for a new system of monitoring.
I will first examine the recommendation that came from the Joint Committee on that point. We have discussed at some length the long-overdue nature of the Bill and the amount of time that it has taken to get to this point. However, leaving the present aside to look at the future, we are keen to ensure that the Bill can be implemented successfully and in a manner that is practical for those caught within its remit.
The Bill will enable the UK to meet its international obligations and we believe that it will have a strong deterrent effect on companies and individuals who might otherwise have paid bribes. Assessing the deterrent effect on the basis of the number of additional prosecutions per year for bribery offences is a flawed approach. Significantly, the partial impact assessment produced by the Government to accompany the draft Bill suggested, as we discussed this morning, that only 1.3 additional prosecutions a year would result from the Bill. We are slightly perplexed and intrigued about how that number was reached. Perhaps the Under-Secretary will give us more information about the basis for the calculations.

Claire Ward: I explained earlier today how the 1.3 was reached. It was based on one contested SFO case and one contested CPS case over three years. That is how we get to 1.3.

Jonathan Djanogly: I thank the Under-Secretary for that explanation, but as I said this morning, the target seems to be pretty low.
Monitoring the deterrent effect of legislation is inherently problematic. Its intangible nature makes any assessment that is based on quantitative evaluation methods inadequate, so we need to devise new strategies to assess the effectiveness of the Bill.
The Joint Committee report commented on the anticipated need for additional resources to be allocated to prosecuting bodies for enforcement actions or prosecutions under the Bill. For instance, the Director of Public Prosecutions told the Joint Committee that
there would be an additional need for resources if there were significantly more investigations undertaken by the police as a result of these proposals.
Similarly, the City of London police overseas anti-corruption unit stated:
The level of resource, currently available, has been sufficient to obtain the results identified thus far
but noted that an intelligence assessment would be required to identify the level of additional resources needed to combat corruption overseas.
We do not necessarily agree with those comments. They might be partly true, but there might be the possibility of working more efficiently or pushing cases forward more quickly. However, we believe there is a need to track properly how money has been spent and how successfully funds are being employed. An annual report would provide a good opportunity to measure expenditure and evaluate cost-effectiveness.
It is crucial that there is a focus on more than just the deterrent effect. Although there is a real argument that the focus should be on deterrence, there needs to be equal emphasis on changing corporate culture. At the most basic level, that will mean generating sufficient publicity to make companies aware of their new responsibilities.

Jeremy Wright: Does my hon. Friend agree that what he describes would assist the Governments desireas expressed quite rightly by the Under-Secretary throughoutto set a gold standard for the rest of the world to admire and, it is hoped, emulate?

Jonathan Djanogly: I certainly do. My hon. Friend makes an important point. It is one thing to put in place the gold standard in terms of legislation, but that is quite different from achieving prosecutions, a change of corporate culture and a change of attitude throughout the world by getting Governments to buy into what we are doing. I agree, however, that the new clause would do much towards promoting such change.
Reynolds Porter Chamberlain stated in evidence to the Joint Committee that an Act arising from the draft Bill would need to be given wide publicity
to ensure that all UK businesses are aware of the need to prevent bribery and meet this regulatory burden.
Compliance then needs to be monitored, but one of the most surprising elements of the Joint Committees report is the apparent acceptance by many that there will be no compliance monitoring. The Governments impact assessment noted that there would be no compliance monitoring process, and the CPS noted that there was unlikely to be an increase in prosecutions because of the difficulty in obtaining evidence in the first place.
If difficulties in obtaining evidence are the main barrier to prosecution, it seems odd that the Government do not intend to monitor compliance with the law, since that would be one of the primary means by which offences could be identified, as well as systems corrected, before any breach in the law occurred. Global Witness said that the lack of monitoring meant:
There is no obligation on companies to report bribes by their employees and no onus on the authorities to monitor whether or not companies anti-bribery mechanisms are adequate or not. Once again it seems that there is little incentive for compliance.
We are unsettled by the apparent uncertainty regarding the deterrent effect of the Bill and the ability to monitor compliance with it. Is the aim of the Bill simply to satisfy the OECD that we have put in place the law, or are we aiming to produce workable legislation that is a practical response to the serious problem of international bribery?
We appreciate that tracking prosecution rates is not necessarily indicative of the success of the legislation, especially as one of the Bills purported aims is to bring about a change in corporate culturean objective as intangible as it is aspirational.
We believe that an annual statement of strategy that highlights core areas for the Government and business to work on, as well as discrete milestones for the achievement of such objectives, would permit a more informed assessment of the impact and success of the Bill in the years following its enactment. It would allow trends to be tracked and initiatives implemented that could ensure that the UK continued to comply with its obligations under the OECD convention. It would also allow for a benchmark to be created that could be utilised by future Parliaments to judge whether the Bills provisions needed to be amended. Ultimately, that is what we would hope that our proposal could encourage.
The Joint Committee applauded the Governments suggestion that a review of the impact of the legislation would be conducted after three to five years of its enactment, but recommended thatany revised impact assessment generated by the Government should set out a
comprehensive set of performance indicators so that the criteria against which the legislation is being assessed are clearly understood.
Annexe 1 of the Joint Committees report included a review of the draft Bribery Bill impact assessment by the House of Commons Scrutiny Unit. It was quite critical of the Governments partial impact assessment, which, as with everything else surrounding the Bill, was somewhat rushed and altogether last minute. Some of its recommendations would be ideally suited as the basis for an annual strategy report. The review asked:
On what basis the net cost to the private sector has been calculated...Whether the cost estimates are subject to any sensitivities/margins of error...How was the one-off cost of £50,000 for awareness raising calculated, and will this be sufficient to inform all UK companies of the implications associated with the new legislation? How will this money be used?...In relation to the new discrete corporate offence, what evidence is there for the IAs assertion that in most cases the activities of SMEs will not fall within the main focus of enforcement activity?...Has the MoJ made any estimates of the cost to the criminal justice system of failed prosecutions under the new discrete corporate offence?
That is not an exhaustive list of the issues that we would like to see addressed in an annual strategy paper, but it is a good pointer. Given that no full impact assessment has been concluded on the Bill, there is a need for an ongoing assessment of its impact on business to be maintained from the point of enactment.
In January, after many delays and no little prodding, the Government produced what we hope will be the first annual report on anti-bribery. The report could form the blueprint for what we envisage under the new clause. Paragraph 1.4 of the report sets out how the Government
will address and manage the evolving challenges and establish a clear legal, regulatory and policy framework for action against foreign bribery.
It goes on to state:
Law reform through the new Bribery Bill will be the keystone of this approach
but that the anti-bribery strategy
also reinforces links to the wider international anti-corruption agendareflecting our commitment to focus on the causal drivers of foreign bribery and deepen our collaboration with international partners.
The report sets out four strategic objectives and the strategy for achieving those objectives. Most interesting of all is the Governments self-monitoring formula, which states that they will
measure success through the delivery of specific pieces of work and our performance in international anti-corruption surveys and corporate studies.
Most surprising of all is the fact that the entire piece of work has been condensed into just nine pages.
Furthermore, I note that, in paragraph 1.7, the Government commit to reviewing the strategy set out in the document in two years time, stating that they will
review this strategy in 2012 in the light of progress updates to Parliament.
We therefore do not believe that we are seeking a huge concession from the Governmenta reduction from a two-year review to an annual review, and codification in statute that the guidance will be produced.

David Howarth: Despite the hon. Gentlemans speech, I think that the proposal is quite a good idea, and I shall briefly explain the two reasons why. First, I am afraid that our countrys international reputation for anti-corruption and anti-bribery efforts has suffered because of the events of the past few years, especially the calling off of the SFOs Saudi Arabian investigation. We need to do more than just pass the Bill, so it would be a good idea to have an annual report so that minds could be focused on the importance of anti-corruption into the future.
My second reason relates to money. It is not enough to improve the law, although the Bill will be a vast improvement in the law, because we must have the necessary enforcement effort to bring that into reality. The Solicitor-General seemed to concede during the most recent Question Time that the SFO had received no specific funding for its anti-corruption work for more than a year. The SFO seems to be transferring funding internally from its anti-fraud work to its anti-corruption work, which is not satisfactory. The Solicitor-General said that specific funding could be provided for big cases, but that is an unsatisfactory way of proceeding. If funding depends on going back to the Government for grants for specific cases, it puts a political block on the prosecution of particular big cases, which is not an entirely proper way for the system to run. As the hon. Member for Huntingdon said, one function of an annual report would be to examine whether the resources devoted were adequate, and I think that that is a question that we all must ask.

John Howell: I feel a sense of elation, as for the first time in the Committees proceedings we have moved away from a subject that is the prerogative of lawyers to one that is the prerogative of management consultantsat last I can come into my own.
The new clause deals with the important point of the continuing monitoring of the Bill. This is something that we need to sort outit would be helpful to hear the Ministers commentsbecause one can monitor in the future only if one has set out at the beginning a clear benchmark to measure the success of the Bill.
Paragraph 244 of the Joint Committees report set out the following concern:
Given the Government's lack of emphasis on increasing the prosecution rate for bribery, it is difficult for us to assess what success would look like.
The Committee went on to look at the need for a comprehensive set of performance indicators. I am not sure that I like that idea because it suggests a very bureaucratic approach.
There are really two choices. One indicator that is immediately measurable is the number of cases brought each year, but the Government do not favour that, as we discussed at length earlier. The other, which my hon. Friend the Member for Huntingdon raised, is culture change. The difficulty with measuring culture change, however, is that it falls into measuring either outcome or process. A general criticism of the Government over the past 13 years is that measuring process has come ahead of measuring outcomes. It is difficult to see how the outcomes can be measured in this case. Process can be measured easily, such as by monitoring how many leaflets a company has given its employees to highlight the concerns raised in the Bill and to outline what employees have to do to comply. That is important, but it tells us nothing about the outcome we are seeking to measure. The proxy of a questionnaire about companies and business peoples activities and approaches has little ability to measure outcomes and would be very partial. That highlights the difficulty the Government will face when deciding what outcomes they will measure and monitor over subsequent years to draw contrasts and make comparisons.
It is crucial that we have such measuring and monitoring. As with all such things, I think Parliament should be given oversight of how the strategy is working. It is important to monitor both sides of the cost element: the cost to the Government of implementation and the cost to businesses of complying. That tangible element could be introduced as a parameter for the Bill. I urge the Under-Secretary to say more about the likely performance indicators and the way in which she will identify outcomes that can be measured over a series of years.

Oliver Heald: I want to ask a couple of questions on how the Government intend to fund the strategy objectives and the enforcement of the new law, and on what the best way of monitoring that might be.
I understand that the City of London police will play an important role in looking at overseas bribery. It is recognised as being expert in financial fraudstopping it, that is. That is partly because the City of London has so many financial institutions and so many people working in them. I find it surprising that the Department for International Development has been funding its work on overseas bribery. I am not sure how long that funding is for and would be grateful if the Under-Secretary told us. The City police force seems to work closely with the Serious Fraud Office, the major prosecutor for large frauds. Apparently, 17 cases are currently being dealt with. A lot of work has been done by the City police, Transparency International and the Government on the proposed guidance.
On how we monitor what happens beyond the first year, it would be helpful if the Under-Secretary told us whether we will rely on DFID to fund the investigations and, if so, why. Is the City force, acting with the SFO, seen as the main pipeline for prosecutions? One reason for that question is that some substantial fraud cases have ended up with rather surprising prosecutors. The classic example is the Jubilee line case, which ended up being prosecuted by British Transport police. It would be worrying if DFID funded an investigation by an authority other than the City of London policeperhaps the British Transport police looking at a bribery aspect of an overseas transport contractand the expertise of the SFO was not engaged. What assurances can she give us that a nice, robust package is being put together for the implementation of this important Bill and how is it to be monitored?

Robert Syms: There is a good case for an annual report, because the whole thrust of the Bill is to increase public awareness of the problem of ensuring best corporate governance and high standards. We have discussed the OECD, the European Community and various third-world countries a great deal, and we ought to be publishing a report so that not only Parliament but those abroad can measure and monitor our contribution in this field.
I appreciate that it will not be easy and that there are problems. One of the Under-Secretarys strongest arguments was that deterrence has to be an important part of the Bill. Deterrence is difficult to measure, although we can measure prosecutionI might disagree with my hon. Friend the Member for Huntingdon hereso if prosecutions go up, the deterrence and the Bill are not working. There are arguments both ways.
An annual report would be useful, because we are all busy people in Parliament and often focus on what is in front of us. An annual report would build more pressure for debates in Westminster Hall and questions on the Floor of the House, and allow hon. Members to track progress. The suggestion is a good and reasonable one. A report would be more valued as the years pass and we get better at measuring progress.

Claire Ward: As the Committee is aware, the Bill does not create a scheme of regulatory rules with which individuals and businesses need to comply. The suggestion from the Opposition appears to be that we should have regulatory rules, with compliance monitoring of business. The business community will read the Oppositions views carefully and will bear in mind the additional burdens that it might need to look at if we were ever, unfortunately, to have a Conservative Government.

Oliver Heald: The Under-Secretary might have that imposed on her quicker than she would like.
Our suggestion was that we should know who will investigate such crimes and who will prosecute, that we should be reassured about the proper funding and that the situation be looked at annually. Why would that impose any burden at all on businesses?

Claire Ward: Because the hon. Member for Huntingdon sought to suggest earlier that businesses should be in compliance with the legislation, with some monitoring of their compliance. That is what I understood him to say. [Interruption.] Perhaps he wishes to set the record straight.

Jonathan Djanogly: I explained the Governments current thinking as envisaged in their own report, and said that it should be used in considering what we do in the future. I did not in any way intend to imply that it should be used as a way of increasing regulation on business. That is not the intention at all; rather, this is a way of monitoring the Governments approach to an anti-fraud and anti-corruption policy.

Claire Ward: The Committee should be aware that the Government have an anti-bribery champion in the form of my right hon. Friend the Justice Secretary, who launched the foreign bribery strategy on 19 January. The overarching aim of that strategy is to reduce the involvement of UK nationals and companies in foreign bribery and the harm that that causes.
The strategy sets out four strategic objectives: strengthening the law, supporting ethical business, enforcing the law, and international capacity building. The strategy builds on the Governments earlier anti-corruption action plans, which were formulated in response to calls for more joined-up work across government to deliver the commitments from the 2005 Gleneagles G8 summit and the Commission for Africa. The strategy also complements existing demand-side strategies on anti-money laundering, the repatriation of looted assets and support for good governance. According to the World Bank, it has put the UK at the forefront of efforts to recover the proceeds of international corruption.

Jeremy Wright: If the Government have a strategy very much along the lines described by hon. Friend the Member for Huntingdon, what on earth is the objection to an annual report to assess how it is doing?

Claire Ward: If the hon. Gentleman will allow me to make some progress, I shall explain. The foreign bribery strategy is based on the solid foundation of effective co-operation over a number of years between more than 20 Government Departments, agencies and law enforcement bodies. It is also being developed through a series of soundings with stakeholders, including round-table meetings of leading UK companies, civil society representatives and enforcement authorities. The strategy sets out a plan for addressing and managing the challenge of foreign bribery, establishing a clear legal regulatory and policy framework. It recognises that we cannot stand still, and that additional work is required to keep pace with the evolving challenges. In addition to the reform of the law via the Bribery Bill, the strategy sets out a number of measures: for example, to support ethical UK businesses through additional training for staff in overseas missions, and reducing demands for bribes by supporting local law enforcement and good governance.
We will measure success by reference to specific objectives set out in the strategy, such as the provision of online training for staff in overseas missions, increased inter-agency co-ordination on overseas capacity building and technical assistance, and the bringing into force of the Bill. We will also look at the UKs performance in international anti-corruption surveys such as Transparency Internationals corruption perceptions and bribe-payers indices, and in the light of the next OECD evaluation of the UK.

John Howell: I am sure the Under-Secretary is not saying this, but perhaps she will confirm that she will not now measure success by the number of meetings that Ministers and officials have, and the number of training courses they go on. If she relies on businesses filling out surveys, she will find that the compliance costs of that are greater than any of the other compliance costs likely to be imposed on businesses by the Bill.

Claire Ward: I was simply suggesting that there is a whole range of ways in which we will measure the success of the foreign bribery strategy that I and my right hon. Friend the Justice Secretary are championing.
Hon. Members will note that this is a foreign bribery strategy. That does not mean we are complacent about the maintenance of high ethical standards in public life and business transactions in the UK. We are, of course, intent on ensuring full awareness of the domestic dimension of the new criminal law as part of the Bills implementation. In addition, the Committee knows that the Government have been active in the public sphere, passing, for example, the Parliamentary Standards Act 2009, which has been augmented by provisions in the current Constitutional Reform and Governance Bill. That Bill will implement those recommendations of the report on MPs expenses by the Committee on Standards in Public Life that require primary legislation, and will also put the civil service code on a statutory footing. Those were some of the issues raised by Transparency International.
Returning to the proposed new clause, my right hon. Friend the Justice Secretary made it clear when the foreign bribery strategy was launched that we would provide annual progress updates to Parliament, and review the strategy in 2012. We do not believe that anything substantive would be gained by turning that commitment into a statutory requirement, as proposed in requirements (a) and (b) of the new clause. The Government already intend to report to Parliament on progress towards achieving the key anti-bribery measures set out in the strategy, as well as on the strategys future development.
We will come on shortly to discuss the hon. Member for Huntingdons new clause on advisory services, but proposed new clause 1 also provides for the Governments annual report to include details on the advisory services available to commercial organisations, and the fees to be paid. We have made it clear, as has the Joint Committee on the Bill, that we are not persuaded of the case for an advisory service to advise commercial organisations on the adequacy of particular measures to combat bribery. We take the view that there are fundamental problems with a Department seeking to provide advice of that sort to a commercial organisation. We do not, therefore, support requirements (c) and (d) of the proposed new clause, which would, in effect, bring such a service into existence.
On the point raised about funding for the City of London police and enforcement issues, the Government established a dedicated investigatory capacity in the City of Londons overseas anti-corruption unit in 2006, which they expanded through additional funding in 2008 and new intelligence assessment work in 2009. The SFO is devoting an increasing amount of its resources to international commercial corruption, and about one third of its resources is now devoted to overseas corruption allegations involving up to 100 investigators. In addition, the MOD police have a role investigating overseas corruption in MOD defence contracts.
Enforcing the law on foreign bribery is of course a strategic objective in the UK foreign bribery strategy. Both DFID and the Department for Business, Innovation and Skills provide funding for the overseas anti-corruption unit. The arrangements, which are part of the National Fraud Intelligence Bureau, support 12 investigators and an overseas corruption intelligence team of five people.

Oliver Heald: It is welcome that the City of London police and the MOD police will be the lead enforcement agencies. Will they be the only ones or is it possible that other police or enforcement agencies will end up becoming involved without having the specialist knowledge? We want such work carried out properly by people who have been trained properly.

Claire Ward: Without doubt, the City of London police, the Serious Fraud Office and, when appropriate, the MOD are the authorities that have the support, resources and expertise available within their organisations to deal with such complaints and concerns. We expect those authorities to undertake the work. The Crown Prosecution Service will prosecute cases potentially when police forces in England and Wales bring such matters to its attention. On that basis, I encourage the hon. Member for Huntingdon to withdraw the new clause.

Jonathan Djanogly: While listening to the Under-Secretary, I thought, Thats all right then. It all seemed so perfect. But is it? Both my hon. Friends the Members for Henley and for North-East Hertfordshire made some important points to explain how the provision of such a report would help best practice, enforcement and the monitoring of the Governments anti-corruption strategy. Many good things would come from it. My hon. Friend the Member for Poole identified the fact that it would be a good format for parliamentary engagement in anti-corruption strategy, which is perhaps too much the preserve of Ministers under the Governments current format.
One reading of what the Under-Secretary said is that the monitoring of anti-corruption is essentially something that should be kept within the Department, with a rather vague nine-page report published every two years. She presented a picture of well-connected Government action with all Departments and directors moving smoothly in line with a strategy that was well co-ordinated. Wearing my shadow Solicitor-General hat, I must say that that is a different picture from what we are picking up on the ground.
Actually, we have a serious problem at the moment with the need to have a coherent policy of deciding who leads on particular types of prosecutions and to what extent prosecuting agencies should be unified. Admittedly, it is a difficult issue, but it has been left for too long and will need to be a priority of an incoming Conservative Government. It is of concern to us, and a good start would be a statutory annual report, which is why I shall press the Committee to a Division.

Question put, That the clause be read a Second time.

The Committee divided: Ayes 6, Noes 8.

Question accordingly negatived.

New Clause 2

Advisory service
(1) The relevant government department shall make provision for a service which shall respond to specific enquiries from any commercial organisation on a without prejudice basis concerning the adequacy of its procedures for the purposes of section 7(2) of this Act.
(2) A response under subsection (1) shall not prevent the Attorney General or relevant Director from consenting to proceedings under section 10 of this Act..(Mr. Djanogly.)

Brought up, and read the First time.

Jonathan Djanogly: I beg to move, That the clause be read a Second time.

Joan Walley: With this it will be convenient to discuss new clause 3Advisory service - fee
(1) The advisory service provided by a government department shall be entitled to charge those commercial organisations making specific enquiries pursuant to section [Advisory service] above, a fee.
(2) The Secretary of State shall determine the fee payable under subsection (1) on an annual basis and the amount so determined will be detailed in the annual strategy report published pursuant to section [Annual strategy report]..

Jonathan Djanogly: These new clauses are tabled in an attempt to plug some of the gaps that we feel have come out of debates on the Bill. We have already touched on the difficulty businesses face in complying with the clauses relating to corporate responsibility and adequate procedures, the problems of ongoing compliance monitoring and the need for a system that changes current attitudes and in so doing encourages companies to come forward and report corruption.
Plans to update and rework this patchwork of antiquated laws have been mooted since the mid 1970s with the Salmon Commission reporting in 1976. The Nolan Committee followed in 1995 and ushered in an era characterised by international pressure to reform and rationalise the UKs corruption laws. International obligations arising from agreements with the OECD, the EU and the UN have increased pressure on the UK to develop common standards at an international level for its anti-corruption measures.
Over recent years the UK, as has been mentioned by many hon. Members, has seen its international reputation on matters of bribery diminished as a consequence of criticism of the robustness of our domestic procedures and processes on corruption, not to mention the publicity generated by the crimes of some companies. British business has traditionally been a bastion of fairness and propriety in its dealings overseas.
Despite required changes to the law in practice it is also important to recognise the good practice in British business and the desire of most British business men to do the right thing. However, we need to recognise that the OECD in particular has been forthright in its criticism of the UK stating in October 2008 that it was
disappointed and seriously concerned about the UKs continued failure to address deficiencies in its laws on bribery
I should like to make some comparisons with other jurisdictions on this specific point. One aspect that I want to discuss is how some other jurisdictions have been faster on the uptake when it has come to amending their bribery laws. One facet of those laws has been the provisions of independent bodies to assist bodies on matters pertaining to bribery laws. Hong Kong, for instance, has the Independent Commission Against Corruption and the Corruption Prevention Departments advisory services group, which was created in 1986.
Since its inception, the group has advised some 3,000 private companies. It provides tailor-made corruption prevention advice on systems or internal control. It also assists companies in drawing up staff codes of conduct and in particular a policy on solicitation and acceptance of advantages, a policy on acceptance of entertainment, guidelines on declarations of conflicts of interests and guidelines on handling confidential information. Any company can go along to the advisory services group and seek its free advice on the adequacy of the systems and procedures that it has drawn up.
This advisory services group also formulates and distributes codes of industry best practice and organises talks and seminars to promote them. Lord Thomas in the other place was a vociferous exponent of the ICAC quoting two impressive sources. The first was the chairman of the Hong Kong Institute of Directors, Mr Herbert Hui, who said:
Directors are entrusted with the execution of corporate governance standards within each corporation, listed company, SME or NGO. The Advisory Services Group of the Corruption Prevention Department assists corporations to enhance corporate governance standards from a corruption prevention point of view. We highly recommend directors of corporations to make use of the Group's free and professional consultancy services.
The director and chief executive of Cathay Pacific Airways Limited, Mr Philip Chen, said:
Since its establishment in 1985, the Advisory Services Group of the Corruption Prevention Department has been conscientiously assisting private sector companies in enhancing system controls and promoting to staff the importance of corruption prevention. In the past, we had sought advice from the Group on various parts of our operation. I highly value the Group's work and contributions to the community.[Official Report, House of Lords, 7 January 2010; Vol. 716, c. GC62.]
Both Lord Mackay and the Earl of Onslow joined Lord Thomas in supporting the provision for an advisory service.
In the United States, the US Attorney-General is required under the Foreign Corrupt Practices Act 1977 to provide an advisory service whose remit is to respond to requests about whether a proposed action will be lawful. In the US, there is a rebuttable presumption that acting in accordance with the advice of the service will mean that no offence has been committed.
We have heard a number of mixed views on the issue of an advisory service for the UK. On the whole, business was very much in favour of having such a service, no doubt deriving from its experience of the operations of the Takeover Panel and the Competition Commission, which provide a similar service in other corporate spheres. For instance, Philip Bramwell of BAE Systems said of an advisory service:
This is of immense value to companies looking for certainty about how conduct would be treated and about the efficacy of their proposed approach to compliance. It is especially useful around mergers and acquisitions and new businesses that may have an uncertain history.

Robert Syms: An important point is that if someone in the middle of a corporate structure was worried about what their company was doing, they could use an independent advisory service to persuade their senior management that there was a problem. I think that one of the greatest uses of an outside advisory service would be to change corporate culture.

Jonathan Djanogly: My hon. Friend gives a practical application of how the provision would be of benefit to corporate Britain. In its brief on the Bill, the International Chamber of Commerce stated that it was vital that there should be a formal reference and clearance procedure, operated with express Government sanction equivalent to that offered by the US Department of Justice. It thought that mere informal and private guidance by the SFO or any other prosecuting authorities would be insufficient. A formal procedure to refer doubtful cases to a prosecuting authority would place the UK on an equal footing with the US.

Oliver Heald: When they read the Governments guidance after it is finally published, small and medium-sized enterprises might wonder whether they come under the light-touch regulation category or whether they will be slightly further up the scale in terms of measures. Would not another advantage of the provision be that they would be able to check that out by talking it through with somebody?

Jonathan Djanogly: My hon. Friend makes a pertinent point. Smaller companies that move up the scale and start trading in developing countries will have to take a big leap of faith and look for advice. Huge costs are often involved in small companies doing their first deal, so an advisory service could be very helpful to them. The ICC differentiates between informal and formal advice, but I will return to that topic later.
The ICC highlighted the ancillary benefits that such a service would bring. It stated that the inevitable preliminary discussions that could lead to an application for advice would enhance the dialogue between companies and the authorities, increase efficiency and usefully provide for an accessible body of jurisprudence. As the ICC notes, such a system operates successfully in the US, where the provision of clear and responsive rulings enables US businesses to compete in international markets. Is that not the exact environment that we wish to create for British business?
Professor Horder expressed support for the idea in his evidence to the Joint Committee, saying:
if I could start from a slightly different view, were we to have in this country an anti-bribery body, a commission, a semi-official body of some sort, charged with giving this kind of advice I could well see as being appropriate...Were we to have somebody charged with giving advice of this kind I think that would be very much of benefit both publicly and to companies and would give them reassurance.
One distinction must be drawn out at this stage. The new clause provides for a service that is focused on compliance procedures and is aimed at minimising the risk of corruption, rather than the risk of prosecution arising from a particular action. One thinks of the takeover panels no names advisory service, of which I have a great deal of first-hand experience and which can prove exceptionally useful to all parties concerned in commercial transactions.
We accept that the US system is inherently different from the UKs and that, as noted in the Joint Committee report, there are concerns about the independence of prosecutors. With the new clauses, we are calling for more thought to be given to the provision of a British version of the US system that is sympathetic to the aims of the Bill and the intricacies of the UKs justice system. Much has been said about the need to change corporate culture and the general attitude to bribery. Much has also been said about the inherent problem of prosecuting crimes of corruption because of the lack of sufficient evidence to bring a case. Lord Thomas of Gresford made that point concisely in the other place when dealing with Lord Tunnicliffes response on the Governments position, which relies heavily on the prosecutorial concerns put forward by the Director of Public Prosecutions and the Serious Fraud Office. Lord Thomas said:
I want the Government to take a different view, and to step back and look again at the benefits that the Joint Committee did not have time to investigate. I want them to consider whether this is an idea that they should take up and provide the sort of advice to companies that they clearly want.[Official Report, House of Lords, 7 January 2010; Vol. 716, c. GC65.]
We see the advisory service as an amalgamation of all the aims of the Bill and a response to all the inherent difficulties that we have outlined in the Committee. Such an organisation could monitor compliance, ensure adherence, guide businesses through the potential minefield of offences and encourage early disclosure of suspect practices.
To critics such as Professor Wells, who thought that the service would be an unnecessary public expense, I point to the possibility of fee charging, which is suggested in new clause 3. We do not necessarily want that, but it should be considered as an alternative if the only argument is that the service is a good idea but will cost too much money. If the companies had the opportunity to pay for advice, perhaps that would be better than them not having advice at all.

Jeremy Wright: Does my hon. Friend agree that it might, in fact, be better even than that from taxpayers point of view? If companies had to pay for the advice that they received and, as a result of receiving the advice, decided not to take a course of action that might otherwise have led to a prosecution, the taxpayer would be saved the expense of that prosecution into the bargain.

Jonathan Djanogly: My hon. Friend makes a very good point about the net cost implication, rather than just immediate cost. If business wants the service and the comfort of knowing that they are complying with legislation, perhaps they should have the right to pay. If the appropriate balance could be struck, the fee could be set at a level that ensured that companies would not abuse the service as a clearance system for every action, however small, and that the service would be self-sustaining in the long run.
The intention behind our proposals is to ensure that a company can rely on any advice from the advisory service as an evidential matter in a trial. The burden of proof will be on a company to say that it has adequate procedures. When proceedings were brought, if a company had gone to such a service and obtained advice, and was relying on the advice that it received, it would be quickly apparent whether any offence had been committed. If a company could say in a letter to the prosecuting authority, We asked for advice; we got it and we followed it, I imagine, save in the most exceptional cases, that that would prevent a prosecution.
It would seem that the Government, or rather Ministers in the other place, overlooked what already exists in the UK to advise business. During various debates in the other place, they said that this was not our way of doing things. However, I refer the Under-Secretary to the SFO guidance entitled Approach of the SFO to dealing with overseas corruption, which came out only a few months ago. I am sure that she has read itit is a good read. It is not only helpful, but important to the debate, because it takes a slightly different approachan informal one rather than a formal oneand contains the exact same idea that a company should have someone whom it can approach.
The guidance states:
A number of corporates and professional advisers have told us that it would be very helpful to them if we were able to offer an opinion procedure concerning future enforcement activity along the lines offered by the US Department of Justice. We are sympathetic to this.
That document came out well before the debates in the other place. However, it was not mentioned there, which was a staggering omission. It continues:
The circumstances in which this procedure will be appropriate will need to be discussed but we are ready to offer assistance in one type of case which corporates have mentioned to us. This is where a group (A) is proposing to take over another group (B) and, during due diligence, discovers overseas corruption issues in (B). (A) is committed to a modern ethical corporate culture and, if the transaction goes ahead, would take the necessary remedial action in respect of what has happened. (A) wishes to know what our approach would be.
We appreciate the need for help in the circumstances and will give (A) assurances about our action. These assurances could be that no action will take place provided that (A) takes the remedial action it has told us that it will take if the takeover goes ahead. Alternatively, if we find that the corruption is long lasting and systemic, we might say that we would consider a criminal investigation whether at the corporate or individual level.
We appreciate that these issues are often likely to be very confidential and price sensitive. We would anticipate that professional advisers would want to discuss a possible approach with the SFO before it was actually made.
Corporates have also asked for guidance on how we would apply the offence in the Bribery Bill of negligently failing to prevent bribery. We welcome the opportunity to discuss our approach with corporates. We can discuss our general approach, which is to focus very much on changes of behaviour so far as possible in order to promote a modern corporate culture. Our emphasis is on helping corporates to develop this culture and to use enforcement action only where this is necessary and proportionate.
That is helpful, and I am pleased to be able to put it on record. The document continues:
In any discussions about procedures within the corporate we shall be looking to find evidence of adequate procedures to assess how successful the corporate has been in mitigating risk. We shall also be looking closely at the culture within the corporate to see how well the processes really reflect what is happening in the corporate. For example, we shall look for the following.

Joan Walley: Order. I hope that the hon. Gentleman will not read out the whole quotation.

Jonathan Djanogly: No, Ms Walley, I will not, although there is a lot of it. There is only a little bit more that is key to the debate. If any corporate has not heard about itit will not have heard from the Government, because it was not mentioned in the other place, and I do not know whether the Minister will mention it in her remarksit will need to be put on record.
The SFO will be looking for the following:
A clear statement of an anti-corruption culture fully and visibly supported at the highest levels in the corporate...a Code of Ethics...principles that are applicable regardless of local laws or culture...individual accountability...a policy on gifts and hospitality and facilitation payments...a policy on outside advisers or third parties including vetting and due diligence and appropriate risk assessments...a policy concerning political contributions and lobbying activities...training to ensure dissemination of the anti-corruption culture to all staff at all levels within the corporate...regular checks and auditing in a proportionate manner...a helpline within the corporate which enables employees to report concerns...a commitment to making it explicit that the anti-bribery code applies to business partners...appropriate and consistent disciplinary processes...whether there have been previous cases of corruption

Joan Walley: Order. There is an explicit definition of what is reasonably short, so I hope that the hon. Gentleman will conclude the quote.

Jonathan Djanogly: Yes, I will. Finally, the SFO will look at
whether there have been previous cases of corruption within the corporate and, if so, the effect of any remedial action.
That is the end of the quotation. I make no apologies for putting it on the record, because it is important. However, it is unofficial, and is not on the face of the Bill.

Oliver Heald: It would be helpful to know whether the Ministry of Justice and the Home Office have had discussions about the matter. I think the SFO is guided by the Home Office, or possibly the Attorney-General, whereas the Ministry of Justice looks at policy. Perhaps there simply has not been an opportunity to work it all out.

Jonathan Djanogly: That might well be the case. I was going to ask the Under-Secretary to put on record her Departments approach on the SFO guidance, which it has not discussed to date. However, that is the approach of only one of the prosecuting authorities, and others might have their own approaches.
I could ask why the SFO is shooting off on its own, without going through the Government or other prosecuting authorities, but I will certainly not do that because that approach is exactly the type of proactive, helpful and forward-thinking initiative that we want from our prosecutors, and I have personally congratulated the SFO director on it. How does that fit with the narrow-minded approach on advice that, so far as we have heard, the Government have taken? They refuse to deal with any aspect of adviceformal, as proposed in our new clause, or informal, as the prosecuting authorities quite sensibly seem to be putting in place. Those are serious issues, so I look forward to the Under-Secretarys response.

David Howarth: My noble Friend Lord Thomas of Gresford made some fascinating remarks in the other place about the Hong Kong system during an interesting debate that also covered the US. There is something there to be investigated and thought about carefully.
What came out of the debate in the other place was that there were also disadvantages in other systems, as the hon. Member for Huntingdon was good enough to mention. One is the difference in attitude towards the independence of prosecutors here and elsewhere. There are problems with prosecutors being seen to commit themselves in advance, with legal consequences that can be complicated and difficult.
As for cost, I am not sure that simply charging a fee is a way round the problem. The cost has to lie somewhere, as such a system is expensive to set up. In addition, the advisory service in Hong Kong is part of a very different system of dealing with corruption, which includes ferocious procedural rules about what will happen to people who fall foul of the system. I suspect that the deterrent effect of those rules explains some of the success in Hong Kong.
My view is that new clause 2 is very good apart from its use of the word shall. It would make a lot more sense if that word were may. That would mean that a service could be put in place if the relevant Government Department chose to go down that route because, after further study, it was decided on balance that that was the right thing to do. There is a lot more work to do, however, especially on the detail of how the system would work procedurally and constitutionally, and not just on cost.

Jeremy Wright: This is a slightly mischievous way to look at things, but the new clause does not say how helpful the response shall be. One could argue that a varying range of responses might be offered, and some might be more helpful for the businesses concerned than others, depending on how freely the prosecutors felt able to answer them.

David Howarth: That interesting interpretation of the word service might not be very helpful in such circumstances.
If the details can be worked out in a way that fits into our system, it might be worth empowering the Government to do such a thing, but I do not think that can be achieved simply with different versions of particular guidance or advice. The problems are procedural and legal, and they also relate to cost, and they will require detailed work. Given the particular wording of new clause 2, I do not think that I could support it, but I would support further work in this area.

Jeremy Wright: I have one or two things that I want to say in support of the new clauses, which are worth while and worth adding to the Bill. The first is the general point that this is an important area of new law. We are breaking new ground, as we have said, and it is reasonable to expect some assistance for those companies that will be affected. I will not revisit our earlier argument ant guidance but, to some extent, it overlaps with this issue.
The arguments that the Under-Secretary made on guidance were that the Government do not wish to catch companies out and do not intend to increase the number of prosecutions. They wish to send out the right messages and ensure that companies avoid bribery so that cases do not reach the prosecution stage, which is entirely the right approach. The guidance is there to offer businesses what assistance the Government can to understand what they should, and should not, do and avoid the possibility of prosecution.
The Under-Secretary made the perfectly reasonable point that, in guidance, we cannot anticipate every conceivable circumstance and outline every conceivable case. That is reasonable, but the answer is not necessarily to fall back, as we know, on prosecutorial discretion without other assistance. However, if we cannot assume that we know the circumstances of every conceivable case, the answer might be to ask, why not supplement the guidance with the offer of specific assistance? A company could go to the advisory service and say, Please assist in the specific circumstances that I face and explain what I should do in these circumstances. We recognise that the guidance cannot cover every eventuality, so we should supplement it with specific assistance when it is requested. There is therefore a good case for offering clarity to those likely to be affected by the legislation, partly with guidance and partly by supplementing that guidance with specific advice on the facts of the case.
The point I made to my hon. Friend the Member for Huntingdon in an intervention is also relevant. Although I accept the point made by the hon. Member for Cambridge that there will inevitably be a cost in setting up any such advisory agency, over time that will be offset by the avoidance of prosecutions, I hope, in a great many cases. Businesses could say, I do not understand what I should do and whether I will lay myself open prosecution if I take a particular course of action, so I will seek advice and, having taken that advice, avoid that prosecution. In such circumstances, the taxpayer will make a significant saving through the prosecution not occurring in the first place, and the basic running costs of the advisory agency will be covered by the fee set out in new clause 3.
Not only would the service be financially neutral, but it would be potentially advantageous, certainly in the longer term. In the end, this is a question of fulfilling the objective that the Government have set out for the legislation, which is not necessarily to prosecute more people but to ensure that those involved in businesses that may come into contact with bribery of various kinds understand what they have to do, can get the information they need to take the right course of action and, therefore, avoid being prosecuted. The clarity that the advisory service could offer will assist in that objective.

Robert Syms: Advisory services are always extremely useful. The Government had a scheme to help people with mortgage difficulties. It was not successful in terms of the number of people who were helped but, when I talked to the Council of Mortgage Lenders, I realised that it was successful in that it put people in touch with their mortgage lender because they got help from them after they asked about the scheme.
Many people who are going to do business abroad contact their chamber of commerce and the various exporting organisations, and are given a checklist or a list of organisations that can help on a range of things to do with credit, banking and so on. An advisory organisation from which they would get some advice about the pitfalls of bribery and about the culture in certain areas would be very useful, simply because it would be on the checklist of organisations that a firm or partnership would want to talk to before they went abroad. Problems often occur when people do not understand the culture of a country and they find that they are manoeuvred into a situation that they did not expect.
If the point of the Bill is deterrence, to ensure that people do not go down a particular route, an advisory service would be very useful for the Government. If there were several hundred companies going to a particular part of the world to sell their products, and they were all asking questions about certain practices or concerns, that would be an important pointer for that organisation to feed intelligence back to the prosecuting agencies about particular things that they ought to be very much aware of. Indeed, they would get a lot of people phoning and raising concerns that would be helpful in advising companies and also the Government and agencies. I think that that would be useful.
I am not sure about charging for advice. As my hon. Friend the Member for Huntingdon pointed out, there will be substantial savings if companies are kept on the straight and narrow and not pulled into the ambit of legal problems. Moreover, the success of some advice services does not come in response to formal queries in which, as he pointed out, someone says, Im Mr. Smith from Warwick, Leamington Spa or wherever and I have a particular problem. It arises when people phone up without saying who they are, and raise a concern at the first point of contact. Someone can phone an organisation such as ACAS and not have to say who they are; they can ask a general question about employment and it will provide guidance. If someone wants more specific advice, they have to say who they are, which is a good thing.
I want to get back to the point I made in an intervention on my hon. Friend. If someone who is a cog in a business machine is worried about their job, their pension, their future, and they are being pressured or bullied to pursue a particular course of action by a manager, the fact that they can go to an independent advisory service to ask for advice, then perhaps pray in aid that advice within their corporate structure, is useful. It may be a useful tool for that individual to change the culture of the company or to be able to say to their managers, Ive got advice; it is contrary to what we are being told and I am very worried about it. My hon. Friend made a good point, which deserves serious consideration by the Government.

Oliver Heald: I have just two or three points to make. First, I welcome self-cleansing, as I mentioned earlier. It is a good thing that the SFO is the sort of guidance that my hon. Friend read out. Its offer of guidance is welcome and should be encouraged. Secondly, we must look at the position of small and medium-sized enterprises and the problem of defining them. If we look at a range of employment lawsthe Governments gender pay audits apply where a business has 250 employees or more; there are other provisions where it is 50it is not entirely clear what an SME is. The guidance that the Government will produce for clause 9 needs to consider that. The draft that has been produced says that further work is required, but I hope that it will be possible to provide guidance for individuals and individual companies so that they can simply ring up and get an answer or informal advice.
It will be a great pity if SMEs find that there is not enough information in the written guidance and have to go to the type of agencies that my hon. Friend the Member for Poole mentioned, which give advice about bribery. However, there is always a danger with consultants and bodies of that type that people end up getting advice that is very cautious and requires a small business to do far more than is really necessary. We have seen that in the disability field on adaptations. Consultants suggest that walls be knocked down and great ramps put in, when in fact a small adaptation would be adequate. We have seen it happen with health and safety. It is important for small businesses that they have light-touch regulation and that they can discuss, with a proper Government source, exactly what it means so that they have an authoritative place to go.
As for the position of the three directors, the SFO is happy to give advice, but is there a problem for the DPP and the director of Revenue and Customs Prosecution? Perhaps there is, because there are different cultures within the organisations. For example, HM Revenue and Customs has a different approach from that of the DPP in how it negotiates with taxpayers. Perhaps the Under-Secretary can give us an idea of whether there is a problem between the three directors. If not, why not just say that the Serious Fraud Office will be the department that gives the advice? We would then have a willing department that knows what it is doing offering the advice. The others can say that it is the lead, just as it is in the investigation of the offences; in a way, problem solved. Whichever organisation is the advisory body, is its role to be involved in trade missions and say, along with the Under-Secretary and businesses, This is what we do in respect of anti-bribery?

Claire Ward: The new clauses tabled by the hon. Member for Huntingdon would augment the generic guidance that we intend to provide under clause 9 with an advisory service that would provide bespoke advice to individual commercial organisations on a fee-paying basis. However, the nature of the proposed guidance is fundamentally different from that envisaged under clause 9, which will cover procedures that commercial organisations can put in place to prevent bribery. The advisory service envisaged by new clause 2 would enable commercial organisations to seek an official view on the adequacy of their procedures for the purposes of clause 7(2).
There is an important and, indeed, fundamental difference between the two approaches. It is one thing for the Government to issue generic guidance about procedures that may be adopted to prevent bribery, but it is quite another to offer advice in individual cases on whether the procedures put in place are adequate. It is for the courtsnot a Departmentin the context of individual criminal proceedings to determine whether any given procedures are adequate for the purposes of clause 7(2).
The hon. Member for Huntingdon made extensive reference to the SFO guidance, but that advice is limited to the narrow situation described in the guidance. In reality, it is similar to the self-referral mechanisms that I mentioned earlierit does not amount to a general advisory service. The SFO director made it clear in his evidence to the Joint Committee that a wider advisory service on a corporate offence would be unmanageable, because corporate organisations would want to obtain clearance for each transaction that took place about which they were worried to prevent further action. That would be unmanageable.

Jonathan Djanogly: My understandingthe hon. Lady might want to put me rightis that, in the US, which has the system without a fee, the number of referrals is limited. I think that it is fewer than 10 a year, so she is not correct that, just because we do not have to pay, there will be a lot of referrals.

Claire Ward: The hon. Gentleman is right that the number of referrals under the US system is low. It is about five cases a year. However, he is comparing the US system of justice with the UK system, but there is a completely different set of circumstances in how such issues are dealt with and what is acceptable. On that basis, the US legislation allows for certain types of activities to take place, but the UK system does not.

Jonathan Djanogly: It is an obvious point, but given that the US has only five referrals a year, why would there be so many more in this country?

Claire Ward: As I have just explained, the basis on which referral and advice takes place is quite different, because of the way in which US legislation on bribery and corruption is set up and because what is acceptable is quite different from the UK system. It is not appropriate to make the comparisons. The advisory system that the hon. Gentleman proposes is quite similar to that of the US Department of Justice and the system that operates in Hong Kong.
Those schemes were considered by the Joint Committee on the draft Bribery Bill and while I am aware that several witnesses from the business community indicated that they would like to see such an advisory service, that was not the view of the Joint Committee. It acknowledged that it might have some benefit, but it rejected the idea, noting that such schemes might prejudice the independence of prosecutors and were generally incompatible with our criminal justice system. That is the main point. Our criminal justice system is not the same as the US system, so it is wrong to make comparisons and to assume that one form of advisory service in the US would be appropriate to overlay on the UK justice system.

Jeremy Wright: Leaving aside the comparisons with the US for a moment, may I make slightly more seriously the point that I made rather frivolously to the hon. Member for Cambridge? If the Under-Secretary is right and there are circumstances in which prosecutors would be extremely uncomfortable in giving specific advice to a company, nothing in the new clause prevents the prosecutor from simply refusing to give the advice. But where the answer was rather more simple and helpful, it could be given. It does not mean that a prosecutor or anyone else working in such an agency would have to give the kind of assistance about which she is concerned.

Claire Ward: Let us be absolutely clear about the practical consequences of doing so. A company would seek advice from the advisory organisation and if a prosecutor wished to pursue a case against it, the company would understandably wave in front of the prosecutor the advice from the advisory body, and argue that it must be clear. That limits right from the very start the prosecutions ability to look at all the matters and all the facts.
The big difference is that unless the advisory service is given every essential fact and detail when it gives the advice, it is difficult and therefore inappropriate to tie the hands of the prosecutor. That was the main objection that was raised with the Joint Committee, on which the hon. Member for Rugby and Kenilworth and the hon. Member for Huntingdon both served, and it was the main reason why it would not want to see an advisory service in place.

Jonathan Djanogly: Surely the advice that would come out of the advisory service would be based purely on the facts presented to it. If facts were not presented to it, surely the prosecutor would not have to take note of the advice.

Claire Ward: The opportunities for muddying the waters in this matter are huge. It is not clear cut. That is why we argue that the right way to do this is to provide guidance to companies under clause 9 that they must have adequate procedures, giving them the full information on the basis of that guidance and allowing them to make that judgment. Therefore, the Government believe that to have in place, running alongside, the opportunities for self-referral and to allow the prosecution to decide what is appropriate in the circumstances is a far better and more appropriate way to proceed.

John Howell: I am struggling to understand why the advice that will be given by this advisory group when used in a court would be any different from the opinion that I might seek from a QC.

Claire Ward: It would be official advice from a Government agency and so it could not possibly be compared to that which a company might seek from counsel or any other legal source.

John Howell: In that case, can the Under-Secretary assure me that she will go through every piece of advice provided by the Government, in particular concerning companies and SMEs doing business overseas, to excise anything that might prejudice an action under the Bill? Plenty of advice has been given by other organisations during the debate on the BillI have mentioned what TIUK provided. It is important to make the distinction.

Claire Ward: That is not a relevant point at all. We are talking about a specific advisory servicedesigned by an Opposition thought processwhich would have a role to advise in such circumstances. That is not the same as the advice that TIUK or any other agency might provide about doing business abroadthat is quite different. The purpose of the advisory service would be simply to avoid the companies being prosecuted. [Interruption.] Of course it wouldin practical terms, that it is exactly what the companies would hope to achieve. If not, I am not sure what the purpose of the new clause is. The hon. Member for Huntingdon is saying that the advisory service would give advice. Companies would expect to be able to follow that advice. However, they could still be prosecuted in such circumstances. In practice, that would be very difficult.

Jeremy Wright: There are two points to make. First, new clause 2 clearly sets out that any advice would be given without prejudice. In other words, a prosecution could still follow and everyone would have to understand that. Secondly, if a company seeks advice on what it should do, and it is given advice that it follows, yes, of course the point is to avoid prosecution. That was entirely in tune with everything the Under-Secretary has been saying in Committee. The objective is not necessarily to drag companies through the courts, but to ensure that they do what they should do to avoid bribery. The proposal is simply an extension of that.

Claire Ward: We have made it absolutely clear that our intention is not to drag through the courts well-run companies with adequate procedures in place. We hope that the Bill will be an effective deterrent and will encourage companies
Mr. Djanoglyrose

Claire Ward: Perhaps the hon. Gentleman will let me finish.
We hope the Bill will encourage companies to have good and adequate procedures in place. It is all well and good saying in new clause 2 that the advice should be without prejudice, but in practice specific advice by such a service would inevitably have to be taken into account by the prosecuting authorities, therefore constraining those authorities. That is the reality of what the hon. Gentleman and his colleagues are proposing.

Jonathan Djanogly: The Minister paints a black and white picture, whereas the reality is often more confused. Let us say, for instance, that the company goes to the advisory service with a transaction that has a series of commissions involved. Some might be proper commissions and some might stretch into what would constitute bribery. The advisory service could give guidance as to what would be appropriate. Such things are not always black and white; what is right can differ in the circumstances. For a smaller company in particular, the service could be a valuable one, helping it to weave its way through what could be tricky matters.

Claire Ward: If what the companies are seeking is guidance, it will be provided under clause 9. It is not a tick box and simply about adhering to every aspectit is guidance. As much as the hon. Gentleman might like to think that that is how it would work, in practice it simply would not. A prosecutor or court considering the adequacy of procedures in any individual case will look at all the circumstances, including the particular facts that constitute the original offence committed by the person associated with the organisation. Consequently, it would not be possible, even if appropriate, to offer a definitive assessment of the adequacy of any particular procedures in isolation from specific facts. In such circumstances, any advice offered would be of doubtful utility to those whom it is intended to benefit.

Oliver Heald: Is there not a tension between the desire of the prosecuting authorities not to give up a scrap or iota of their discretion, and the desperate desire of commerce and business to have a clear answer? Is the Under-Secretary, as a Justice Minister, perhaps straying from the true path by not being prepared to give up an iota of prosecutorial discretion? That is her jobshe is a Minister of Justice. However, is it not in the countrys interest for business men, and particularly small business men, to have a clear answer on which they can rely?

Claire Ward: It is in the interest of this country and of business globally that we stamp out bribery, which is what we are doing through the Bill. By providing guidance under clause 9, we recognise that it is important that businesses have an opportunity to consider what they need to do to put in place adequate procedures. That is why we are establishing the detail of the guidance, and we hope that businesses will take note of it.
It would be wrong, however, for us to tie the hands of the prosecution authorities in the Bill and remove their discretion to look at all the facts of a case and decide what is appropriate. That goes hand in hand with the other clear message that we are sending as a result of the Bill: the need for self-referral. That is the right way to proceed. While Opposition Members have expressed strong views and businesses have expressed an opinion, I do not believe that the new clause represents the right approach, so I trust that the hon. Member for Huntingdon will withdraw it.

Oliver Heald: There is an inconsistency between what the Under-Secretary is saying and what the Government have said. There is all the talk about small businesses and how we want them to succeed as part of an export-led recovery. The SFO, being helpful, says, Yes, if people come to us, were prepared to give them advice and not prosecute them. If people are trying to self-cleanse, we will give them a nice, positive attitude to try to help businesses in good quality new managements.
The Under-Secretary, however, is not prepared to give guidance that a small business can rely on, or to allow people to ring up or go and see someone to whom they can explain their circumstances and have a deal done. As a Justice Minister, she wants to stand up strongly for the right of the prosecutor never to be fettered and to be able to look at every scrap of evidence when he is deciding whether to prosecute. There is a tension there, so I ask her to consider at this late stage whether she has got this right.

Jonathan Djanogly: This helpful debate has, in some ways, raised as many questions as answers. The hon. Member for Cambridge said that the Hong Kong system was different and that it had strict penalties. However, once the Bill is in force, we will also have strict penalties.

David Howarth: It is not just the penalties, but what happens to a person if they are accused.

Jonathan Djanogly: When the legislation is in place, it will be down to prosecutorial discretion here as well. I note the hon. Gentlemans acknowledgment that the new clause is worthy of further work, and I take that on board.
My hon. Friend the Member for Rugby and Kenilworth made a good and important point about new clause 3 when he said that the cost of the advisory service could be recouped from the savings made from non-prosecutions and from the process not being followed up at a later time.
My hon. Friend the Member for Poole talked about how the service would be useful for companies that did not understand what they might be letting themselves in for. He also made the interesting point that it could be used as a weather vane for corruption activity around the world and that that could be fed back to the administrator.
My hon. Friend the Member for North-East Hertfordshire spoke about the benefits of self-cleansing that would be made available. He also forcefully made the point that the interests of the country, the judicial system and business needed to be balanced. He made his case very well that the Under-Secretarys interpretation might be rather rigid.
The Under-Secretary made some cursory remarks about the SFO guidance. She did not analyse the guidance, which I think is making a move towards providing informalI might have incorrectly used the word unofficial earlieradvice. That is moving the debate forward, but she did not recognise that. She then said that, to the extent that the guidance is helpful, it was limited to specific circumstances. I have read out the specific circumstances, which were cases of bribery, so the guidance is very specific, and specific to what we are discussing. The Under-Secretary, however, is almost ignoring the implications of that.
The Under-Secretarys differentiation between the US system and ours was also unconvincing. She spoke about how a service could muddy the waters, but it cuts both waysin many cases, the waters can be pretty muddied anyway. We are not talking about the black and white situations that I felt she dipped into at various points. The waters will often be muddy. The proposal could, in certain situations, provide a mechanism that would allow companies to get some clarity, particularly those that cannot afford the expensive legal advice required at an early stage before securing a contract. To that extent, it would be particularly helpful for SMEs working in developing areas, which we hope will happen more often if our economy is to pick up.

Jeremy Wright: While my hon. Friend is talking about the way in which the Under-Secretary has approached the issue, does he agree that she has not recognised the fundamental difference between companies that wish to do the right thing and are seeking advice about how they might do that, and those that are clearly seeking to find a way around the law so that they can do the wrong thing? Surely new clause 2 would mean that companies in the latter category would not be given the advice that they were looking for by the advisory agency.

Jonathan Djanogly: I thank my hon. Friend for that point. I think that the Under-Secretary is making the opposite point, so I am pleased that he has put that right. I tabled the new clause as a probing amendment, but after hearing the debate, I feel more confident that we should have some sort of service. I am not sure whether we should adopt the exact wording proposed in the new clause, but my hon. Friends support its approach, so I would like to press it to a Division.

Question put,That the clause be read a Second time.

The Committee divided: Ayes 5, Noes 7.

Question accordingly negatived.

Ordered, That further consideration be now adjourned. (Helen Jones.)

Adjourned till Tuesday 23 March at half-past Ten oclock.